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Thursday
Jan092014

CareFusion settles allegations of kickbacks in whistleblower case

CareFusion Corp. has agreed to pay the government $40.1 million to settle allegations that it violated the False Claims Act (FCA) by paying kickbacks and promoting its products for uses not approved by the Food and Drug Administration (FDA), the Department of Justice announced today. 

CareFusion is a California-based medical technology company that develops, manufactures and sells pharmaceutical products, including products sold under the trade name 'ChloraPrep.' ChloraPrep has been approved by the FDA to treat a patient's skin prior to surgery or injection. 

The settlement resolves allegations that CareFusion, by way of agreements made in 2008 by CareFusion’s predecessor, paid $11.6 million in kickbacks to Dr. Charles Denham while Denham served as the co-chair of the Safe Practices Committee at the National Quality Forum (NQF). NQF is a nonprofit organization that reviews and recommends standardized health care performance measures and practices. 

The government alleges that the purpose of the payments was to induce Denham to recommend and arrange for the purchase of ChloraPrep by health care providers.

This settlement also resolves allegations that, during the period between September 2009 and August 2011, CareFusion knowingly promoted the sale of ChloraPrep for uses that were not approved by the FDA and made unsubstantiated representations about the appropriate uses of ChloraPrep.

The settlement resolves a lawsuit filed by a whistleblower named Dr. Cynthia Kirk, a former vice president of regulatory affairs for the Infection Prevention Business Unit of CareFusion, under the whistleblower provisions of the FCA. Such provisions allow private citizens with knowledge of false claims to file suit on behalf of the government and share in any recovery. Kirk's share in this case was $3.26 million. 

DOJ notes in its press release that this settlement shows that the government is intent on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team initiative, which was announced by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius in May 2009.

DOJ has increasingly used the FCA as a means of penalizing those who commit health care fraud. Since January 2009, the DOJ has recovered a total of more than $17 billion in FCA cases, with more than $12.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The claims resolved by the settlement are allegations only. There has been no determination of liability.

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Julie DiMauro is the executive editor of FCPA Blog and can be reached here.